Martin Finney

[SteveO]

Neil, David, your points of view are valid and respected. However, they are flawed by paradoxes; chiefly, why get involved – let someone else do it. The trouble is when everyone thinks like that nobody has anything.

 

[Cliff Williams]

Looks like this retirement malarky is getting quite contagious!
http://www.masterpiecemodels.co.uk/news.php?nid=432

 

[djparkins]

Neil, David, your points of view are valid and respected. However, they are flawed by paradoxes; chiefly, why get involved – let someone else do it. The trouble is when everyone thinks like that nobody has anything.

Steve -

Obviously I bow to your greater experience as a manufacturer.

But I do take exception to your latest posting on one level. Look at my earlier posting - 80-100 hour weeks to build up PWP + all that has been done since. I don't think you could fairly accuse me of being in 'let someone else do it' camp!

But as I say, you have the experience, not me. I know nothing, being from Barcelona - Barcelona, west Wales, that is, where men are men and the sheep are worried!

DJP/MMP

 

[SteveO]

David, I would bow to your experience every day of the week. However, your point is not relevant to mine.

So, let's see what happens – it may all come to nothing.

 

[Steve Cook]

It struck me that both Neil and David are advocating a degree of caution and an appropriate level of consideration to the opportunity that has been presented. Quite rightly, all they have suggested is that riding a wave of emotion or second guessing to end up losing money doesn't do anyone any favours.

Consortiums can be difficult places given that they involve both people and money - a difficult to manage combination, even when everybody sings from the same hymn sheet and has the same ideals and expectations from the business. That and the supply of parts (assuming that maintaining the current reputation and quality are paramount) strike me as the crux of the business.

I rather fancy that understanding the business would be the first step too. I hope you don't mind if I pick on your point of streamlining the supplier side of things SteveO, but are there 20 because each is the master of the part he does, as well as mitigating the risk in that if one supplier falls ill / retires / suffers machine failure the whole range is not left scuppered? As an observation I'd be wanting to maintain the current practise first, then start optimising if there is space for it.

Sorting out an exit strategy and timescales will be fun discussions too. It would be nice to see it come off, but we know its a full time job for one man, divide that up between consortium members and it makes it quite an extra commitment, albeit one that could provide a great deal of satisfaction.

I wish any interested party the very best of British.

Steve

 

[djparkins]

However, your point is not relevant to mine.

Well your suggestion that I may be in the 'let someone else do it' camp certainly is relevant. I think it unwarranted.

 

[JimG]

With five members, an absolute maximum investment of £10k is required, although this figure is very much negotiable with Martin for the right outcome. He has a figure in mind, but realises that this may not be feasible or attractive to any potential purchasers.

Steve,

I suspect you will need a bit more than whatever price Martin Finney agrees to - like working capital to keep the business turning over. If Martin has a lot of kits of all his range on the shelf at the end, then your immediate costs might not be too high since re-stocking could be a while off, although Martin's selling price might be pitched higher because of this, but if re-stocking is required, then you will need working capital to pay your suppliers, and the other costs of running the business.

Jim.

 

[Neil]

Neil, David, your points of view are valid and respected. However, they are flawed by paradoxes; chiefly, why get involved – let someone else do it. The trouble is when everyone thinks like that nobody has anything.

No, that's not what I said. Others seem to have understood why I was advocating a cautious, considered approach. Put simply it covered the maxims about square pegs, round holes, fools and their money, but with a bit more detail and a lot more sugar. Next time I'll try to be more direct.

 

[SteveO]

The conversation stream has quickly gone from optimism and encouragement to something entirely different, with the impression that this is a definite proposition. It's not.

With a view to avoid wading knee-deep through sticky, smelly pointlessness I'll courteously bow out of the conversation on the merits - or not - of an idea, or what was said or inferred.

 

[Railwaymaniac]

Unfortunately I think that I too am going to have to back out of this, as the only thing that I could contribute (other than money) is that I could attend meetings in the West or SouthWest.

I very sincerely wish you folks all the very best with this enterprise, I agree with the comments about it being a tragedy to loose Martin's range of kits.

Ian

 

[BrushType4]

Steve,

I suspect you will need a bit more than whatever price Martin Finney agrees to - like working capital to keep the business turning over. If Martin has a lot of kits of all his range on the shelf at the end, then your immediate costs might not be too high since re-stocking could be a while off, although Martin's selling price might be pitched higher because of this, but if re-stocking is required, then you will need working capital to pay your suppliers, and the other costs of running the business.

Jim.

Won't Martin want paying for the value of any stock on hand in that situation? stock is usually calculated at the cost to produce or procure not the resale price with profits.

I think once you've bought the stock and good will, costs after that will depend on how you run the business. If it's just a hobby on the odd evening and weekend then I can't see you need very much cash at all to run the business. For restocking, buy smaller batches if cash is short.

If someone has the money to meet Martins expectation of goodwill value and cost value of any remaining stock, I would think it would be a no brainer as a hobby business.

 

[Tim Humphreys ex Mudhen]

I was advised many years ago that a business should be run by an odd number of people with a maximum number of two. Although a little tongue in cheek the principle, give or take a little, has worked for me.
I totally agree with Phil's final paragraph, a great hobby business for one person

 

[Scale7JB]

Judging by what Martin told me over email when I enquired about the availability of V2 kits, it wouldn't surprise me if there was a huge crowd around his stand all weekend, with very little stock left by the end of it...

I think after purchase the whole range would need re-stocking.

JB.

 

[Len Cattley]

I would suggest that you would need to bring in new kits as I think that his turnover would be quite low. It would be good if 5 people invested in it with two to run it.

Len

 

[JimG]

Won't Martin want paying for the value of any stock on hand in that situation? stock is usually calculated at the cost to produce or procure not the resale price with profits.

I agree and that could mean an additional chunk of cash if Martin has a fair amount of stock left on the shelf, even at cost to produce

I think once you've bought the stock and good will, costs after that will depend on how you run the business. If it's just a hobby on the odd evening and weekend then I can't see you need very much cash at all to run the business. For restocking, buy smaller batches if cash is short.

If someone has the money to meet Martins expectation of goodwill value and cost value of any remaining stock, I would think it would be a no brainer as a hobby business.

I have some experience of getting etches produced and know what the costs for those can be and suspect that even running small batches of Martin Finney's range will require a fair bit of money. I have no experience of getting castings produced so don't know what considerations there may be in that field - like the possibilities of minimum order quantities which could effect small batch size if you wanted to keep unit costs at a minimum.

And I suspect that it might take more than an odd evening or weekend of your time if you want the business to be worth the investment. For the amount of money being talked about, I would hope that the turnover would be such that some reasonable return on the investment would be realised, and that running the business would be getting close to full time.

I recently took over the post of Shopkeeper for the S Scale Model Railway Society parts department and I was surprised at how much time was required just to service orders, pack them and trundle off to the Post Office to post them. That's basically all I have to do and I don't get involved in the development or ordering of parts. That is done by someone else and I know that that can take up a fair amount of time, mainly chasing producers to get your parts made and delivered - witness the recent situation with delays in supplies of etches to model railway producers.

Jim.

 

[Osgood]

At an average of £500 per kit you don't want to be selling more than 162 units a year or you'll have to register for VAT

 

[djparkins]

At an average of £500 per kit you don't want to be selling more than 162 units a year or you'll have to register for VAT

Ah - but that is letting the tail wag the dog. You would then be able to claim VAT back on your inputs. Non VAT registered sellers are [in effect] charging VAT to customers because they are passing on the VAT on their inputs that they cannot claim back from HMRC and once this is multiplied 1 or 2 or 3 times [whatever their mark up is], the price comes out around the same to the end-user. You can also export more if you are VAT reg. as you can deduct the VAT from the sale price and this makes it more viable for the ex-pats etc. I have traded as non-VAT reg. in the early days and as VAT regisistered since 1993 and much prefer the latter.

 

[Osgood]

I might not disagree David - but in reality the benefit of being VAT registered only becomes real and grows as a business becomes more complex, and does it not very much depend on whether it is a retail operation? For a very basic retail operation, it can have a detrimental impact and warrants careful consideration.

Take a simplistic example:

Buy in parts @ £300, sell for £500, make £200 profit.
Or buy in parts @ £300 (250 plus 50 vat), sell for £500 (416 plus 84 vat), make £166 profit (416-250). 17% less.

Under a different mark-up scenario:

Buy in parts @ £100, sell for £500 and make £400 profit.
Or buy in parts @ £100 (83 + 17), sell for £500 (416 + 84), make £332 profit (416-83). Still 17% less.

I must confess I have no absolutely no idea what the mark-up is on 7mm kits (I don't need to know either, I'll pay what I'm prepared to pay and no more - I'm just glad there are so many enthusiastic producers out there supporting the hobby! ).

 

[Steve Cook]

Edited to add:
Just ignore this post, move along, move along, nothing to see here (unless you want to watch an idiot make a fool of himself with some poor maths of course)

I rather thought the point of being VAT registered was to claim back the VAT on the materials bought in, whilst charging on those sold.
In that case doesn't this

Or buy in parts @ £300 (250 plus 50 vat), sell for £500 (416 plus 84 vat), make £166 profit (416-250). 17% less.

Become:

Buy in parts @£300 (250 plus 50 vat).
Claim back the £50 in VAT.
Sell for £500 (416 plus 84 vat).
Pay £84 in VAT, make £216 profit (416-250+50). 8% more.
That 8% profit then probably covers the effort required to keep record of the VAT paid and claimed.

Steve

 

[djparkins]

I might not disagree David - but in reality the benefit of being VAT registered only becomes real and grows as a business becomes more complex, and does it not very much depend on whether it is a retail operation? For a very basic retail operation, it can have a detrimental impact and warrants careful consideration.

Take a simplistic example:

Buy in parts @ £300, sell for £500, make £200 profit.
Or buy in parts @ £300 (250 plus 50 vat), sell for £500 (416 plus 84 vat), make £166 profit (416-250). 17% less.

Under a different mark-up scenario:

Buy in parts @ £100, sell for £500 and make £400 profit.
Or buy in parts @ £100 (83 + 17), sell for £500 (416 + 84), make £332 profit (416-83). Still 17% less.

I must confess I have no absolutely no idea what the mark-up is on 7mm kits (I don't need to know either, I'll pay what I'm prepared to pay and no more - I'm just glad there are so many enthusiastic producers out there supporting the hobby! ).

I couldn't really follow that. I just tend to work on the net prices with my VAT added on at the end and it annoys the hell out of me if my suppliers are not VAT reg as [see my earlier posting] they are still passing their VAT onto me as they cannot claim it back.

My calculation might be -
Input cost £100 - sell it for £250 [not my mark up!] + VAT - and whatever it comes out to is whatever it comes out to - I would not let the VAT factor impact upon the mark up I wanted to make.

Also, don't you also need to factor in all the other things you can claim VAT back on like tools & modelling equipment, computers & equipment, printing costs and so many other things - moulds, photo-tools and so much more, right down to things like courier fees.

Regards,

David